XPS basement insulation and foundation sill plate

Will using 2 inch XPS foam insulation on the inside wall of a walkout basement rot out the foundation sill plate if the sill plate dosen't have a foam gasket under it? My sill plate has yellow fiberglass under it instead of foam.

If the sill plate does not have a capillary break or is not PT, it is going to rot regardless of insulation type.

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That's a generalization with very little basis, provided bulk-moisture issues are handled correctly. It's potentially at risk, but that potential is only altered slightly by the addition of 2" of XPS insulation on the interior. Which is very different from "...is going to rot regardless..." type concerns.

With 2" of XPS there is about 0.5-0.8 perms of drying capacity between the foundation wall and the interior, so any moisture wicking up from the footing will end up in the interior air, not the foundation sill. The same vapor retardency protects the foundation sill from wintertime moisture coming from the interior air from collecting in the foundation sill as well, as long as the XPS is sealed at every seam & joint to control convective air currents. Putting any other interior vapor retarder to the interior of the XPS would be moving in the wrong direction though. Seal every seam with duct-mastic or 1-part foam before closing it in, and avoid alkyd or other vapor retardent paints (standard latex is fine.)

If there is at least 12-15" of exposed foundation on the exterior the concrete had HUGE capacity to dry toward the exterior, but if the house has limited roof overhangs and no gutters, or if the grade slopes toward the foundation it can become a 2-way street for moisture. But there are ways of dealing with that as well. With 15" of above grade concrete, 1.5-2' roof overhangs and decent surface drainage the only places of any concern would be where roof-valleys might concentrate moisture.

If there is high enough moisture in the foundation to create a rot risk you'll likely see efflorescence on the exterior side of the above grade concrete long before the sill rots. It's a bit of a PITA but not crazy-difficult to slip metal flashing as a capillary break between the sill & concrete if deemed necessary.

Foamy sill gaskets are much less of a capillary break than some might think- they're still pretty crummy, if better than fiberglass. Putting fiberglass in there is pointless- it's not even air-tight even in an idealized application, but it dries relatively quickly after bulk-wetting events. Metal flashing or EPDM membrane make pretty good capillary breaks though.

Perhaps I should have clarified my remarks now that I know they the are under the watchful eye...

I have seen higher than recommended moisture content in slabs without seeing evidence (i.e. efflorescence) on the walls and would recommend putting some sort of after the fact capillary break under the framing before closing up the wall.

And yet, if you have a foot of exposed exterior concrete protected by overhangs and no drainage issues soaking the foundation, the outward drying capacity is still pretty large, reducing the moisture content at the very top of the concrete where it meets the sill.

Two inches of unfaced XPS on the interior still leaves very substantial drying capacity toward the interior as well. I'm far less concerned about this one than I would be were foil-faced iso/EPS were being used.

But if a crust of efflorescence develops on the exterior an inch or three above grade it's an indication that the concrete is seeing a lot of moisture moving through it and exiting at that point, which is a bit close for comfort even if the top of the foundation may still be dry enough, most of the time.